Shanghai land dispute hinges on contract

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An agreement that a Hong Kong businessman signed last year with Shanghai's biggest electrical goods maker and a company affiliated with a district government is the key to his dispute over compensation for land he had invested in.

Businessman Sun Yin-piu is seeking redress from the SVA Group, the electrical components manufacturer, over property in Xuhui district that housed a residential project which was never occupied.

Now the development is being demolished because the district government wants to put a medical research and education centre there.

Bao Bingzhang , Xuhui district vice-mayor, reiterated on Monday that the district government was ignorant of the dispute between Mr Sun and SVA when it paid the manufacturer 230 million yuan in January for the 18,000 sq metre site.

Mr Sun signed a contract with an SVA subsidiary in 1995 to rent the land and develop a residential project there.

When the subsidiary went bankrupt three months later, he tried to enlist the manufacturer's help in obtaining a land permit, he said.

Then in 2001 SVA sued Mr Sun for illegal occupation of the land and won the suit two years later.

Last January, SVA sold the land to the district government for the development of a medical research and education centre.

The government has placed explosives at the site to blow up the tallest building.

The hearing yesterday focused on a contract the manufacturer had produced during the suit against Mr Sun. SVA entered into the contract with a company Mr Sun set up in 1996.

'But the contract they used to demand compensation was dated 1995,' Mr Sun said. 'In [1996], I signed the contract in the name of a company I had set up on Hainan Island.'

He argued it was impossible for him to enter into the contract in 1995 when he did not set up the company until a year later.

Zhang Yu and Bao Wei, two lawyers representing the SVA Group, said the disputed contract was backdated to 1995 with the consent of all parties involved.

According to the agreement signed last year involving Mr Sun's company, SVA and another company - called the Shanghai Xuhui District City Construction Investment Corporation - the parties involved would jointly develop the disputed site.

It stated, however, that if the parties involved could not sign a contract before the end of August last year, the agreement would cease.